Starbucks Receives Bakkt Equity to Start Accepting Bitcoin Payments in 2019
Originally published on: CoinSpeaker
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March 05, 2019
It seems that Starbucks has received a significant portion of equity in Bakkt despite not being a direct cash investor.
Bakkt which is owned by Intercontinental Exchange, is a service for people and institutions to seamlessly buy, sell, store, and spend digital assets. The amount of equity given to Starbucks is unknown, but sources say that it is “disproportionately high given that they did not make a cash investment”.
In return, Starbucks is now heavily investing in creating a card and app that will seamlessly allow it to serve as one of Bakkt’s first merchant on their platform, which will allow customers to pay with digital assets, reported by The Block. All digital assets will be converted to fiat, in order to reduce volatility, and keep the assets off of Starbuck’s books.
Just for reminder, in August last year, Starbucks made a surprising announcement that they would be partnering with the Bitcoin futures platform Bakkt. What was initially interpreted as Starbucks accepting Bitcoin, was later clarified as a partnership in which Bakkt would “only let users trade and convert Bitcoin into FIAT currencies,” which they would use to pay for items at Starbucks. Instead of paying for coffee directly with Bitcoin, buyers would pay with Bitcoin that will be auto-converted to FIAT by Bakkt’s software.
They Claimed You Won’t Be Able to Buy Frappuccino With Bitcoin
The Starbucks spokesperson then wrote:
“It is important to clarify that we are not accepting digital assets at Starbucks. Rather the exchange will convert digital assets like Bitcoin into US dollars, which can be used at Starbucks. At the current time, we are announcing the launch of trading and conversion of Bitcoin. However, we will continue to talk with customers and regulators as the space evolves. Customers will not be able to pay for Frappuccinos with bitcoin.”
Maria Smith also outlined the company’s plans with Bakkt saying:
“As the flagship retailer, Starbucks will play a pivotal role in developing practical, trusted and regulated applications for consumers to convert their digital assets into US dollars for use at Starbucks. As a leader in Mobile Pay to our more than 15 million Starbucks Rewards members, Starbucks is committed to innovation for expanding payment options for our customers.”
Today, it’s more than obvious that one of the phases of this operation, which includes its partnership with Starbucks and Microsoft, is also set to launch later this year. One of the phases is designed to utilize Microsoft’s cloud solutions to allow people to buy, sell, store and spend cryptocurrencies on a global network, powering the aforementioned plan to give Starbucks customers a way to buy food and drinks with crypto.
Bakkt’s Delays May Affect Starbucks Partnership
It also turns out that the delay of Bakkt’s launch has affected the launch of the Starbucks partnership. Bakkt has been trying to get regulatory approval form the CFTC (Commodity Futures Trading Commission). However, the recent government shutdown led to a continuous delay of the anticipated launch that was recently intended for January 24th until they could receive regulatory approval.
So far the new launch date has been set. This puts a damper on the Starbucks partnership, as Starbucks cannot be seen to be working with a crypto exchange that doesn’t yet have regulatory approval.
And, it’s important not to forget that Bakkt is also currently working with the US Commodity Futures Trading Commission to launch futures contracts that are physically backed by Bitcoin, as well as with, already mentioned, Microsoft, in order to utilize cloud solutions to allow people to use digital assets on a global network, to enter the retail consumer markets.
In addition, investors for Bakkt are expected to include, among others, a former affiliate of Fortress Investment Group, Eagle Seven, Galaxy Digital, Horizons Ventures, Alan Howard, Pantera Capital, Protocol Ventures, and Susquehanna International Group, LLP.
Be it is as it may, Starbucks said in its latest earnings report that it continues to grow in China, even as that nation’s economy slows down in the wake of trade tension with the United States. In its most recent quarter, Starbucks reported same-store sales growth of 1% in China and total sales growth of 18% as the company continues to add more stores.